Scythe & Spade Blog

Thanksgiving

by Chas Bonner

In our blog last week, we discussed what is right in America and the world.

Our short blog in this Thanksgiving week is based upon yet more good news seen in the December issue of Popular Science magazine. One of the 2011 Grand Award Winners for new scientific advances was Forage Boost, a microbial soil enhancer reportedly containing over 1 Trillion living microbes per milliliter. According to Popular Science, Forage Boost can substantially reduce or even eliminate the 180 million tons of worldwide nitrogen fertilizer use, blamed for causing algae blooms that kill aquatic life. It also increases productivity of land by 20%, decreases water run-off by half, and therefore reduces water use. It has been in development for over 10 years.

Because the product is so new to the market, there was little news in Popular Science. Therefore we urge you to check out the website of the developer: www.sumagrow.com.

Good news is always good at Thanksgiving time.

We wish all of our clients, customers and friends a wonderful Thanksgiving, and recognition of the bounty for which we can be thankful.

What is Right?

by Chas Bonner

With the continuous drumbeat of what is wrong in the world, the U.S., Congress, the Administration, etc., it is necessary at times to get out of the mud, and think about what is right, in our world and in our business.

On a relative basis, we are blessed to live in America. Think about the pluses:

• The U.S. vs. the European Union or any nation on earth.
• Entrepreneurialism in this country.
• Relatively homogeneous population, as well as diversity.
• Great infrastructure, if we don’t let it deteriorate too much.
• Cheap and plentiful power.
• Excellent universities that students from around the world come to study.
• Strong companies with worldwide penetration.
• Large and relatively open capital markets.

Then consider agriculture:

• More arable land than almost any country on earth.
• Multiple and quality sources of seed, fertilizer, pesticides, fungicides, etc.
• Better irrigation systems than any other country.
• High levels of productivity, and continuing increases.
• A long and deep culture of agriculture.
• Only 3% of population on the land or associated, yet huge support.
• Growing demand for more and better food.

Could things be better? Of course, but we must remember than everything is relative, and where would we rather farm? We are truly blessed.

Fish & Agriculture

by Patti Jo Hardwick

Yes, there is a connection between fish and agriculture, and not just fish farming. Some of the connection is positive, some negative, but it all proves the inter-connection between most segments of our economy and our lives.

Having lived in Oregon for 15 years, I have grown more and more aware of the ocean fisheries and of the fishers whose livelihood depends on the health and sustainability of that industry. Therefore, when seeing a study done by McKinsey Company management consultants, I read it with keen interest.

McKinsey worked with the Food & Agriculture Organization of the U.N. and with the University of California at Santa Barbara for a long time. Their conclusions were that marine ecosystems around the world are broken, that fish are overexploited, and it probably cannot be stopped because over 180 Million people world-wide derive some or all of their living in an industry producing over $500 Billion in revenue per year. Most of the world’s population lives near the sea, many of them in the developing world where they rely heavily on the consumption of the animal protein for their food supply; without which could mean starvation. While the World Bank estimates that sustainable fishing might increase yields by 10-20%, if done, it would mean reducing catch rates dramatically in the beginning, and carefully controlling output around the globe forever, something improbable, if not impossible to achieve.

If a large source of protein in the human diet is depleted, where will it be made up? Given the critical need of those developing countries, plus growing middle classes around the world demanding more protein, where will it be found?

This is another example of the importance of agriculture today and forever. What is lost from the sea must be replaced from the land. We are thankful to be in the business, and hope to continue contributing to its success.

Farmland: Sometimes a Strikeout

by Monte Nevitt

We are firm believers in farming, and even stronger believers in farmland investment. At the same time, we recognize that on the other side of every reward is RISK; therefore utmost care is essential.

A good example of farmland investment becoming a strikeout is Morgan Stanley investing in the Ukraine. Having made mountains of money in 2006, MS decided to up the ante, and buy some of that world-famous Ukrainian black soil, so fertile it could grow anything, and so well-reputed that Hitler had his troops haul some back to Germany during WW II. After buying 11 large parcels of the black Ukrainian soil, Morgan Stanley hired a young Midwest farm boy with a long farming background as well as advanced schooling in farming. They hit the bull’s-eye.

The new MS farm manager loaded up several containers with John Deere tractors, combines, farm implements, seeds and fertilizers, and virtually anything needed upon arrival.

Then the surprises began. First, before the containers could unload, many licenses had to be purchased, and lots of grease was needed. Much of the seed and fertilizer soon disappeared, parts went missing, and officials insisted that MS build roads as well as farm fields. Within 2 years, Morgan Stanley’s farmland investment became history.

This is a reminder to us, when we hear tales of wealth generation in Ukraine, Brazil, Argentina, and third world countries, we might look in the mirror when seeking a good investment property. Although we don’t expect 20% rates of return, we also know nothing will be expropriated, we won’t be paying bribes at every turn, and we don’t worry about theft of all inputs as well as output.

For all the red tape, regulation, checks and balances -- it is hard to beat farming in the USA, where a man can invest his blood, sweat, tears, and resources with confidence that he will see a return, weather, lender, and markets permitting!